Exide Industries Ltd Vs Commissioner of Central Goods & Service Tax (CESTAT Chandigarh)
The appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, arose from an Order-in-Original dated 21.04.2016 passed by the Commissioner of Central Excise, Gurgaon. The Commissioner had confirmed a demand of ₹4,24,11,327 under Rule 14 of the CENVAT Credit Rules read with Section 11A(1) of the Central Excise Act, 1944, along with interest, and imposed an equal penalty under Rule 15 of the CENVAT Credit Rules and Rule 25 of the Central Excise Rules, 2002.
The appellant is engaged in manufacturing batteries for automobiles and other products falling under Chapter 86 of the Central Excise Tariff Act, 1985. The company operates five regional offices registered as Input Service Distributors (ISD), located in Kolkata (two offices), Delhi, Mumbai, and Chennai, and has eight manufacturing units including one at Bawal. The ISDs distribute service tax credit among the manufacturing units through invoices, and the units avail the distributed credit.
During an audit, it could not be determined how much expenditure incurred by the headquarters related to the Bawal unit. The audit therefore alleged that the CENVAT credit of service tax had been disproportionately distributed due to absence of proper description. Based on these allegations, show cause notices were issued for the period May 2013 to October 2015 proposing disallowance of CENVAT credit along with interest and penalty. The department alleged that input services distributed to the appellant were not used by the Bawal unit since the expenses were not recorded in its books of account. The adjudicating authority confirmed the demand on the basis that credit relating to input services used by more than one unit should be distributed proportionately under Rule 7 of the CENVAT Credit Rules.
